In a significant victory for the National Association of Independent Insurers (NAII), regulators were convinced that installment payment fees paid by policyholders should not be reported as written premium.
The National Association of Insurance Commissioners (NAIC) Statutory Accounting Procedures Working Group accepted NAII and industry comments demonstrating why installment payment fees should not be considered to be premiums by the regulators. The regulators deferred final action until the June NAIC Meeting to allow interested parties to review an amendment to the Statement of Statutory Accounting Principles (SSAP) No. 53 to clarify this position.
“NAII applauds the Working Groups’ action and will review the details of the revised language before the summer meeting,” Stephen W. Broadie, NAII assistant vice president, financial legislation and regulation, said. “We believe that the Committee’s decision is the appropriate one, not only for insurers, but for consumers as well.”
On other financial issues, efforts to reform the state financial examination process spearheaded by the NAII and six other industry trade groups was discussed at the Reno NAIC Meeting.
The NAIC’s Examination White Paper Focus Group will meet in April to discuss controlling examination costs, promoting increased reliance on CPA audit work, and improving examiner trainingall areas of concern highlighted in the White Paper crafted by the NAII and other trade associations.
The Focus Group is hopeful that recommendations will be made in May with expected adoption at the June NAIC Meeting.
In other action, the Financial Services Modernization (G) Task Force NARAB Working Group announced that surplus lines bond requirements and fingerprinting requirements for nonresident producers are inconsistent with Gramm-Leach-Bliley Act (GLB) reciprocity standards.
The NARAB Working Groups said that states that retain the surplus lines bond requirements or the fingerprinting requirements for nonresident producers or agents are not in compliance with GLB reciprocity and many not be counted among the 29 states needed to block the activation of National Association of Registered Agents and Brokers (NARAB).
NAII Senior Vice President, Secretary and General Counsel Sam Sorich commented that, “The NAIC is reviewing reciprocity checklists which have been submitted by 39 states in order to determine whether the states are in compliance with the reciprocity standards in GLB. The NAIC will not issue a running tally of states in compliance until the target number of 29 states has been reached.”
Deadline for reciprocity among states is November 2002.
Zip Code Data Protection
The NAIC Property & Casualty Insurance (C) Committee settled a long-standing debate by voting to not require insurers to report data by zip code and make such data public.
The discussion began several years ago when the NAIC’s Statistical Task Force adopted an amended version of Section 17 of the Property and Casualty Model Rating Law that relates to the insurance commissioner’s authority to require insurers to report data. In March 1999 the Statistical Task Force included an extensive drafting note on public disclosure and referred the issue to the Property & Casualty © Committee.
After a lengthy debate, the Property & Casualty © Committee adopted an amendment proposed by Texas Insurance Commissioner Jose Montemayor. The amendment does not require public disclosure of insurer specific zip code data rather it leaves the decision on public disclosure of the data to a state’s public records statutes and trade secret laws.
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